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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Birns: WFS could see improved marine hedging activity and margins with rising prices

CFO discusses the positive effect of higher prices on marine performance.



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Updated on 27 Oct 2017 11:36 GMT

The executive vice president and chief financial officer (CFO) of World Fuel Services, Ira Birns, discussed the positive effect of rising oil prices on the performance of its marine and hedging business during the company's latest earnings call on Thursday.

Birns explained that the company's hedging operation has been "very weak recently", but said that if prices continued to rise, "the opportunity for that type of business to come back picks up pretty significantly".

The World Fuel Services CFO noted that the company could see both improved derivative sales activity and core margins as a result of continued rising prices.

Additionally, the offshore market could expand again if oil prices increase, Birns pointed out.

"As prices go up, we have an opportunity to see some large improvements in marine more quickly than we would necessarily see in our other businesses - just because of the spot nature of that business," Birns observed.

Asia

World Fuel Services explained that the biggest factor influencing the year-on-year (YoY) drop in marine sales volume during the third quarter (Q3) of 2017 was related to the Asian market.

Birns remarked: "The [marine] gross profit decline was again principally driven by reduced volume in our resale business in Asia, as well as a further decline in profits from the sale of price risk management products globally."

Between July and September, sales volume fell YoY by 1 million tonnes, or 12.8 percent, to 6.8 million tonnes.






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